The information you need to make an informed decision

A reverse mortgage is an excellent way for most seniors to earn a return on their home investment, however, it's not necessarily for everyone. To find out more about reverse mortgage, eligibility, how a reverse mortgage works and what you can use it for click on the appropriate link below.

What is Reverse Mortgage?
Who is eligible?
How Reverse Mortgage works?
Why Reverse Mortgage?
FAQ

 What is a reverse mortgage?

Through a U.S. government insured program, originally created by AARP, a senior can obtain a loan for approximately 40%-75% of the appraised value of their home.  The senior never has to repay the loan in their lifetime as long as they live in their home.  Then, when the last surviving spouse dies, the money received (plus about 6% interest) is repaid by the estate, usually from the sale of the house.(Back to top)

EEligibility requirements

You must be at least 62 and own your home or condo. There are no income or credit requirements. Based on your property's appraised value, you may be eligible for a reverse mortgage even if you still owe money on a first mortgage or have a home improvement loan. In fact, the reverse mortgage could pay off your existing loan with cash to spare. (Back to top)

How reverse mortgages work

There are two types of reverse mortgages: the FHA Home Equity Conversion Manager (HECM) and the Fannie Mae HomeKeeper. Both are nonrecourse loans, which means that no matter how high the loan balance grows, you or your heirs never owe more than the home's market value. No payment is required on your loan during your lifetime as long as you occupy your home. Your heirs have one year to pay off the mortgage at a low interest rate. You retain 100% ownership of your home and your heirs get all the future appreciation of your home.

How much you may receive

The amount of money you receive is dependent on a number of factors, including:

• Your age at the time you apply for the loan
• The type of reverse mortgage you choose
• The value of your home
• Current interest rates

You can use this handy reverse mortgage calculator to find out how much your loan could be.

What you do with the money?

Your tax-free proceeds from a reverse mortgage can be used for almost anything, including:

• Daily living expenses
• Home repairs and improvements
• Medical bills and prescriptions
• Credit cards
• Education
• Travel
• Long-term health care
• Retirement and estate planning

Your financial advisor can help you determine the best way to use your funds.

Required HUD Counseling

Before applying for a reverse mortgage, you must first meet with an independent reverse mortgage counselor whose job is to educate you about reverse mortgages, discuss alternative financial options and help you decide which reverse mortgage product is best for you. The session is free and can be done in person or over the phone. Your Reverse Mortgage of Texas representative will be glad to help you arrange this  session.  (Back to top)

A solution to payment problems

Eroding investment portfolios, fixed incomes and other challenges have many seniors facing foreclosure.  If you have 50% or more equity in your home, we can stop foreclosures by paying off your loan with a reverse mortgage. You'll not only be debt-free, you may receive cash back at your closing. Remember, your credit rating as no effect on your eligibility or interest rates. If you've already been threatened with a foreclosure, we will negotiate with your creditor and fast-track your application to a quick close.

Taking care of Medicare/Medicaid issues

If you are currently on Medicare, a reverse mortgage will not affect your benefits.  However, if you or a loved one needs expensive nursing home care, a reverse mortgage can help. In fact, since Texas is a Medicaid "right to recover state, " Medicaid can file a lien on your home to recover their money. A properly structured reverse mortgage can save your home for your children and grandchildren. We even have programs available for those who already have a loved one in a nursing home.  (Back to top)

Frequently Asked Questions

1.      Why Choose Us?
We are a National Correspondent Lender of Financial Freedom, the largest reverse mortgage lender in the country, currently performing more than 70% of the reverse mortgages in the U.S. Financial Freedom is a subsidiary of Lehman Brothers Bank (NYSE: LEH).  Financial Freedom produced reverse mortgages totaling $976 million in 2003 and chose Network Funding to be a National Correspondent Lender because of our company's financial strength and integrity.

2.      Can I do a reverse mortgage if I already have a mortgage on my home?
Yes, as long as your current mortgage doesn't exceed approximately 50% to 60% of the value of your home. If you already have a mortgage or any loan on your home, our reverse mortgage will pay off your existing mortgage or loan, eliminating your monthly payments.

3.      Why is a reverse mortgage better than simply refinancing my current mortgage?
There are two main reasons. First, a reverse mortgage doesn't require monthly loan payments. With a reverse mortgage, the principal and interest are not repaid until the borrower passes away or vacates the home for more than 12 consecutive months. If you are married, the principal and interest are not repaid until the surviving spouse passes away or both spouses are no longer living in the home. If one spouse has to go to a nursing home, the other spouse could remain in the home and not make any payments. Second, there is no income qualifying with a reverse mortgage. If you are 62 or older, you will qualify, regardless of your income or credit history. Traditional refinancing loans require you to qualify based on your income and credit history.

4.      Could you give me an example of how a reverse mortgage works?
Financial Freedom will loan you approximately 50% to 80% of the market value of your home at a low interest rate. This loan is not repaid until you pass away or vacate your home for more than 12 consecutive months. And the U.S. Government guarantees your loan to Financial Freedom.

Here's an example: Let's say you are 65 and own a home valued $180,000 with an existing mortgage of $23,000. That existing mortgage has payments of $600 a month. If you get a reverse mortgage, you would receive the following:

$60,000 TAX-FREE cash that you can receive as a lump sum or monthly income payments over your lifetime.

Savings of an additional $600 a month because your $23,000 mortgage has been paid off.

Your loan is for 50% of the value of your home ($90,000). The $90,000 allows you to pay off the existing $23,000 mortgage, with the balance (after closing costs) going to you in tax-free cash. No repayment is required during your lifetime as long as you or your spouse lives in your home. When you pass away, your children or heirs can sell your home and repay the reverse mortgage with the proceeds of the sale and keep the profits TAX-FREE. And remember, your reverse mortgage is a nonrecourse loan, so the balance due on your loan can never exceed the value of your home.

5.      Are fixed rate loans available?
Not at this time. The adjustable rate mortgage (ARM) features annual or monthly rate adjustments. The rate is tied to the one-year T-Bill. The actual rate on the loan is 1.5% to 2.1% above the one-year T-Bill rate. Interest is paid to the lender only when your home is sold or the mortgage is paid off.

6.      Will I have to pay any fees out of pocket to obtain a reverse mortgage?
No. We never ask you for any up-front money. The loan does require the same fees as a standard mortgage and these fees are rolled into your loan balance   These include a loan origination fee of 2% of your home's FHA appraised value or the FHA maximum loan limit in your county (whichever is lower), an appraisal fee, other ordinary closing costs, and the FHA mortgage insurance premium of 2%.  A monthly servicing fee will also be charged and will be financed into the loan balance so you will not have to pay it in cash.

7.  Are the closing costs and fees in a reverse mortgage high?
No, because they are paid with "future dollars" in typically 15 to 20 years, not with today's dollars. There are no out-of-pocket, up-front fees paid by the borrower in a reverse mortgage.

8.      How safe and secure are reverse mortgages?
Reverse mortgages are sponsored by the U.S. Government through HUD. HUD tightly regulates the fees and expenses that can be charged on a reverse  mortgage in order to protect you.

9.      How will a reverse mortgage affect my heirs or children? I want to leave my home to them.
Most children want their parents to enjoy their "golden years" and are happy that a reverse mortgage gives you the extra money to enjoy life. If your children want to live in your home after you pass away, they simply refinance the reverse mortgage into a traditional mortgage and assume ownership.

If your children don't want to live there, they simply list your home for sale, accept the best offer and pay off your reverse mortgage at the closing. Your children keep the profits, TAX-FREE!! It's a win-win situation, because you and your children get to enjoy your home investment tax-free.

10.  How long does the reverse mortgage process take? When will I receive my money?
Generally, 45 to 60 days.  (Back to top)

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